The mandatory year-end bonus, commonly referred to as the 13th month pay, provides a financial benefit to employees in the Philippines. It is equivalent to one-twelfth of an employee’s basic annual salary. The computation involves totaling the basic salary earned throughout the year and dividing that sum by twelve. For example, an employee earning a basic monthly salary of Php 20,000 would have a total basic annual salary of Php 240,000. Dividing Php 240,000 by 12 results in a 13th month pay of Php 20,000.
This mandated benefit significantly impacts the financial well-being of Filipino employees. It serves as a supplemental income, enabling individuals to meet holiday expenses, manage debts, or allocate funds towards savings and investments. This regulation, established under Presidential Decree No. 851, aims to provide employees with additional financial support during the holiday season and contribute to economic stimulus.
